The Australian dollar is showing little movement on Monday, as AUD/USD trades at 0.7250 in the North American session. In economic news, it’s a quiet start to the week, with only one event on the schedule. US New Home Sales plunged to 468 thousand in September, compared to an estimate of 546 thousand. There are no Australian releases on Monday. We’ll get a look at two market-mover events on Tuesday in the US – Core Durable Goods Orders and CB Consumer Confidence.
The Australian economy continues to suffer from the global slowdown, so there was some talk of the RBA lowering rates earlier this month. That didn’t happen, and the minutes of last week’s policy meeting shed some light on the central bank’s thinking. Policymakers noted that the economy had shown some improvement, crediting this to the lower value of the Australian dollar, which has boosted exports, as well as the RBA’s ultra-low interest rate levels. The RBA also expressed concern about the Chinese economy, but said that despite this, there was no need to lower rates for some time. Interestingly, policymakers said that some players in the financial markets don’t expect the Federal Reserve to raise rates for the “foreseeable future”.
US data was positive late last week, as both housing data and unemployment claims beat expectations. Existing Housing Sales looked sharp in the September report, improving to 5.55 million, which was well above the estimate of 5.38 million. The news was much worse from New Home Sales, which slid to just 468 thousand, its lowest level in 10 months. The markets had expected a strong reading of 546 thousand. Unemployment Claims, a key release, came in at 259 thousand, beating the estimate of 266 thousand. This was slightly higher than the previous reading of 255 thousand, but marked the third straight week that the indicator beat the forecast. The four-week moving average of claims, which reduces the volatility of the weekly jobless reports, is currently at its lowest level since 1973. These figures point to a stronger labor market, but the next big test comes in early November, with the publication of Nonfarm Payrolls.
Recent US data has not been has strong as hoped, with key numbers sending a mixed message about the health of the economy. This has reduced the likelihood of a rate hike by the Federal Reserve before the end of 2015. The markets remain frustrated about the Fed’s lack of communication with the markets, as FOMC members continue to send out contradictory messages about the Fed’s plans. Still, an improvement in US numbers, especially employment and consumer indicators, could quickly revive speculation about a rate hike and boost the US dollar. Next week promises to be interesting, as the Federal Reserve issues a policy statement after its meeting. This will be followed by the release of the Advance GDP report, a market-mover event.
Monday (Oct. 26)
14:00 US New Home Sales. Estimate 546K. Actual 468K
Tuesday (Oct. 27)
- 12:30 US Core Durable Goods Orders. Estimate 0.0%
- 14:00 US CB Consumer Confidence. Estimate 102.5 points
*Key releases are highlighted in bold
*All release times are GMT
AUD/USD for Monday, October 26, 2015
AUD/USD October 26 at 17:45 GMT
AUD/USD 0.7253 H: 0.7269 L: 0.7218
- AUD/USD posted slight gains in the Asian session. The pair has shown limited movement in the European and North American sessions.
- 0.7213 is providing weak support.
- 0.7440 is a strong resistance line.
- Current range: 0.7213 to 0.7440
Further levels in both directions:
- Below: 0.7213, 0.7100, 0.7060 and 0.70
- Above: 0.7440, 0.7664, 0.7770 and 0.7849
OANDA’s Open Positions Ratio
AUD/USD ratio is showing a slight majority in favor of long positions (54%), indicative of slight trader bias in favor of the Australian dollar moving to higher levels.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.